Assume that in October 2019 the Schmidt Machinery Company manufactured and sold 900 units for $710 each. During this month, the company incurred $387,000 total variable costs and $180,500 total fixed costs. The master (static) budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 900 units. 2. Compute for October 2019: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable (F) or unfavorable (U). b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable (F) or unfavorable (U). 3. Compute for October 2019: a. The total flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U). b. The total variable cost flexible-budget variance. Indicate whether this variance was favorable (F) or unfavorable (U). c. The total fixed cost flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U). d. The selling price variance. Indicate whether this variance was favorable (F) or unfavorable (U).

Given

Machinery Co.

	actual op. income	master budget	variances
units	780	1000	220 unfavorable
sales	639600 @100%	800,000 @100%	160400 unfavorable
variable costs.	350950 @55%	450,000 @56%	99,050 favorable
contribution margin	288650 @45%	350,000 @ 44%	61,350 unfavorable
fixed costs	160650 @25	150,000 @19%	10,650 unfavorable
operating income	128,000 @20%	200,000 @25%	72,000 unfavorable

actual fixed OH cost =$130,650

actual fixed selling and admin costs= $30,000

budgeted fixed factory OH costs =$120,000

budgeted fixed selling and admin costs=$30,000

1. fill in blanks

Prepare a flexible budget for the production and sale of 900 units.

unit sold
sales
	$
	$

2.

Compute for October 2019:

a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable (F) or unfavorable (U).

b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable (F) or unfavorable (U).

3.

Compute for October 2019:

a. The total flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U).

b. The total variable cost flexible-budget variance. Indicate whether this variance was favorable (F) or unfavorable (U).

c. The total fixed cost flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U).

d. The selling price variance. Indicate whether this variance was favorable (F) or unfavorable (U).